Greece’s Aggressive Pursuit of Tax Evaders Appears to Collect More Anger Than Money

28/10/2013

ARCHANES, Greece — The tax inspectors swept into this picturesque village in Crete during the middle of a saint’s day celebration recently, moving from restaurant to restaurant demanding receipts and financial records. Soon, customers annoyed by the holiday disruption confronted them. Pushing, shoving and angry words followed, and eventually the frightened inspectors were forced to flee.

“People are so angry and so poor,” said Nikolis Geniatakis, who has run his restaurant here on the main square for the last 34 years and who watched the confrontation from across the street. “What were the tax inspectors doing here? Why aren’t they going after the big fish?”

 If Greece is ever going to get its public finances in order and escape grinding budget austerity, it will have to do a better job collecting taxes. For years, economists have pointed to rampant tax evasion as one of the country’s most serious problems, depriving the government of money it badly needs.

But as the confrontation in Archanes shows, the effort to collect taxes has not gone well; having inspectors run out of town is hardly evidence that the rule of law is taking root in the Greek economy. Rather than instilling a sense of fairness, the more aggressive tax collection program in some ways appears to have aggravated the problem. In particular, attempts to cast a broad net have only fueled public anger at the wealthy, who are often seen as the main culprits.

In the early days of the economic crisis here, Greek officials optimistically predicted that tax collection would soon improve. They bragged of using aerial photographs to get tax evaders who failed to declare their swimming pools on tax returns as required. They zeroed in on doctors who reported low incomes but who somehow paid high rents in affluent neighborhoods.

But despite such headline-grabbing efforts and an astonishing number of new tax laws (22 in the last two years), some question whether the authorities are actually making progress. At the end of 2011, tax arrears totaled 45 billion euros, or about $62.1 billion. At the end of 2012, €56 billion, or about $77.3 billion. At the end of July, with the most active tax period to come, the arrears had risen to €60 billion, or almost $83 billion, equivalent to nearly a fifth of the government’s public debt.

Experts say many of the tax collection measures are not effective, especially those aimed at the rich. Taxing yacht owners, for instance, only encouraged them to moor their boats elsewhere, emptying Greek marinas.

Efforts to overhaul the tax system, many accountants say, have created such a confusing jumble of laws that it will take months, if not years, to understand them. Consolidating and reorganizing the tax bureaus, intended to save money in the long run, has created an administrative nightmare in the short run, with files arriving months after a move, if at all, union officials say.

But perhaps as troublesome, some experts say, is the growing grass-roots anger that led the customers to turn against the four tax inspectors recently in Archanes. Tax collectors have been threatened or chased out of many towns, union officials say, though only a few cases, like the one here, get much attention.

For Mr. Geniatakis, the arrival of the tax inspectors was the kind of showy government move that hurts the little guy but amounts to nothing. In these hard times, he and the other restaurant owners had pooled €1,000 each, about $1,380, for music and decorations, only to see their investment disappear with the crowds when the scuffle began.

“They are driving us crazy, but what about the Lagarde list?” he said, referring to about 2,000 tax evasion suspects with Swiss bank accounts whose names were turned over to Greek officials in 2010.

When a journalist, Kostas Vaxevanis, published the list last year, he was charged with infringement of privacy but was acquitted and is now being retried. So far, no one on the Lagarde list is facing legal action, though officials, answering questions in Parliament earlier this month, said 150 audits were under way. But it remained unclear how aggressive the investigation was.

Πηγή